Debswana powers De Beers�s profits
Brian Benza | Tuesday July 29, 2014 11:06
Announcing the De Beers results for the first six months of 2014, the company said the rise in output reflected improvements in productivity with the recovery from the impacts in 2013 of the Jwaneng slope failure clean-up and Orapa’s planned plant maintenance.
Debswana production jumped 10 percent in the first six months of the year buoyed by increased output from Orapa mine.
Production figures released by parent company Anglo American last week show that Debswana produced 12.02 million carats in the first half of the year from 10.9 million in the corresponding period last year.
In the period, De Beers revenue rose 15 percent year on year to $3.8 billion in the first half, which was the highest segment total of Anglo’s business units. Rough diamond sales jumped 15 percent to $3.5 billion. Higher rough diamond revenue was driven by an increase in sales volume of goods net of a four percent drop in realised prices, according to Anglo. However, De Beers’s average price index in the first half was four percent higher, with this being offset by a lower product mix.
In a statement, Anglo defined global rough diamond demand as robust in the first half, reflecting a positive outlook for polished diamonds in De Beers key markets such as the US, China and India. Stronger consumer demand for polished goods between Thanksgiving Weekend in the US and the Chinese New Year – the key selling season – resulted in higher levels of retailer restocking during the first half.
Last week, De Beers announced a new approach to its rough diamond sales contracts. The new contract period, which will start in March 2015 and run for three years, with an option for De Beers to extend, requires all rough diamond customers to comply with more rigorous financial and governance requirements in order to be eligible for supplies.
De Beers expects continued growth in diamond jewellery demand across its key markets in 2014, driven primarily by the US and China. Other markets are also projected to show growth in local currency this year, with final dollar-equivalent demand levels partly dependent on currency fluctuations.
Looking ahead to the second half, De Beers anticipates the usual market slowdown, with continued retail demand driven by China and the US. Other markets are also projected to show growth in local currency, with final dollar-equivalent demand levels partly dependent on currency fluctuations.